Foreclosure Tenant Remedy in Oregon

Possibly the only thing worse than suffering a foreclosure yourself is being a tenant in a foreclosed home. Until 2009, what rights existed in defense of foreclosure and foreclosure effects rested squarely with the property owner. Since then, however, states such as Oregon have passed laws to help tenants through the situation. However, these laws are aimed more at providing ample notice of the situation than to providing a full remedy.

State Notice Requirement

Prior to 2009, an Oregon tenant might not have even known about a foreclosure until he received an eviction notice from the new owner. Oregon Senate Bill 952, effective since August 23, 2009, requires foreclosing lenders to mail and post a notice to tenants at the same time they post required foreclosure sale notices. While tenants have no rights in halting or otherwise defending against a foreclosure, at least they now are made aware of it before it happens. This allows them more time in planning for what is often an eviction after foreclosure.

Federal Law

Prior to 2009 leases were invalidated at foreclosure and the foreclosing lender could evict tenants with a 30-day notice. Today, the federal Protecting Tenants at Foreclosure Act requires lenders to honor leases. This is especially valuable to tenants with unexpired fixed-term leases. They cannot be evicted until their lease expires. For tenants at the end of their lease, with month-to-month leases and without leases, the act also requires a 90-day notice to tenants before eviction.

Security Deposit

One of the problems tenants have faced in foreclosure has been the loss of their security deposits. In a standard sale, security deposits are transferred at the closing. In a foreclosure, an unscrupulous landlord walks away with the money in his pocket. In Oregon, tenants are allowed to apply their security deposits toward their rent when the property they live in is in foreclosure. To invoke this right, they must inform the landlord in writing.

Cash for Keys

While not all lenders evict tenants, according to the "New York Times," many do. If the lender sends you a 90-day eviction notice after they have foreclosed on the property, you might be able to negotiate a cash settlement in exchange for voluntarily moving out. Lenders offer cash to both former owners and tenants to save on court-ordered evictions. You might be able to both get some cash and negotiate more time in your home.

References

• Oregon Legislative Assembly: Senate Bill 952
• Federal Reserve; Protecting Tenants at Foreclosure; November 2009
• National Housing Law Project: State and Local Tenant Protections
• "The New York Times"; Fannie Mae Lets Renters Stay Despite Foreclosures; Charles Duhigg; December 14, 2008
• Reuters; "Cash for Keys" Aids Home Borrowers, Investors; Al Yoon; March 12, 2010